# Bertucci v. Watkins

Supreme Court of Texas, No. 23-0329

**Bertucci v. Watkins, No. 23-0329 (Tex. Mar. 14, 2025). Holding: Bertucci did not waive his appeal of the derivative claims by inadequate briefing, so the court of appeals must address them; the court of appeals erred in holding fact issues precluded summary judgment on Bertucci's individual fiduciary-duty claim, which fails because he did not assert or establish such a duty in the trial court and conceded it was irrelevant given his derivative claims; fact issues preclude summary judgment on limitations; and the court of appeals correctly resolved the auditor's report and the Dead Man's Rule.**

Practice areas: business organizations, fiduciary duty, civil procedure

## Key issues

- A partner's appellate brief that argued he had standing to assert derivative claims and that the defendant owed fiduciary duties to the business entities did not waive his appeal of the dismissal of those derivative claims, so the court of appeals must reach them.
- Fact issues do not preclude summary judgment against a partner's claim that his co-venturer owed him individual fiduciary duties, because the claim was not properly asserted or established in the trial court and he conceded it made no difference given his derivative claims; the court of appeals also correctly held fact issues on limitations and that the Dead Man's Rule bars the surviving partner's testimony that the decedent approved the expenditures.

## Factual History
Anthony Bertucci and Eugene Watkins went into business together in 2001 developing low-income-housing projects, with Bertucci providing the funding for a sixty-percent interest and Watkins providing expertise and day-to-day management for forty percent; they created a separate set of entities for each project (the B-W entities), typically a limited partnership in which both were limited partners and a general-partner corporation in which they held 60/40 shares (Opinion, PDF pp. 2-3). Watkins managed the entities' funds through a bank account owned by Texas Community Builders, LP (TCBLP), a separate partnership he and his wife created, and only Watkins could expend or distribute from it; Watkins says Bertucci knew of this and always approved how he handled the money (Opinion, PDF p. 4). In 2014 Bertucci's son Christopher, who held his father's power of attorney, found Watkins's accounting records for the account and became concerned that Watkins had diverted substantial funds; Watkins refused further records, and in 2015 Christopher demanded an accounting, removed Watkins from his roles, and sold the remaining projects (Opinion, PDF p. 4).

## Procedural History
After lawyers and title companies interpleaded $4.5 million in sale proceeds, Watkins asserted claims individually and on the entities' behalf, and Christopher asserted claims for Bertucci individually and derivatively against Watkins for violating the Texas Theft Liability Act, breach of fiduciary duty, breach of the duty to account, disgorgement, and breach of contract (Opinion, PDF p. 5). Bertucci died in March 2017, the probate court took the case and named Christopher executor, and it granted summary judgment for Watkins on all claims (Opinion, PDF p. 5). The court of appeals affirmed on the derivative claims, holding Bertucci inadequately briefed them, but reversed on the individual fiduciary-duty claims and on Watkins's limitations, waiver, and ratification defenses, finding fact issues (Opinion, PDF pp. 5-6). The Court granted both petitions: Bertucci petitioned on June 5, 2023, and Watkins cross-petitioned on July 5, 2023; the Court requested merits briefing on November 10, 2023, granted both petitions on May 31, 2024, heard argument on October 1, 2024, and decided the case on March 14, 2025 (Docket; Opinion, PDF pp. 1, 29).

## Issues Presented
Bertucci presents whether the court of appeals erred by refusing to consider his derivative claims on grounds of briefing waiver, and whether the court-appointed auditor's unverified report should have been treated as conclusive (Brief on the Merits (Christopher F. Bertucci, et al), PDF p. 12; Petition for Review (Christopher F. Bertucci, et al), PDF p. 9). Watkins presents whether the court of appeals erred in finding briefing waiver was not harmless or in refusing supplemental briefs, and whether Bertucci, the sole investor and an officer, director, or owner of the entities, was relieved of the duty of diligent inquiry for limitations purposes, whether Watkins owed Bertucci an individual fiduciary duty, and how the Dead Man's Rule applies (Brief on the Merits (Eugene L. Watkins, Jr), PDF pp. 12, 14; Petition for Review #2 (Eugene L. Watkins, Jr), PDF p. 11). The Court decided briefing waiver, the individual fiduciary-duty claim, limitations, and two evidentiary issues (Opinion, PDF p. 2).

## Standard(s) of Review
The case arose on cross-motions for summary judgment, and the Court applied the Rules of Appellate Procedure on adequate briefing, the rule that a court cannot reverse a summary judgment on grounds not presented to the trial court, and the Dead Man's Rule in Texas Rule of Evidence 601(b) (Opinion, PDF pp. 8, 16-17, 25).

## Legal Arguments
**Whether Bertucci waived his appeal of the derivative claims.**

**Petitioners (Bertucci, as executor and derivatively):** The two-justice dissent correctly found that the court of appeals elevated form over substance, because his notice of appeal and docketing statement named the entities, his brief referred to "Appellants" fifty times, and both sides briefed the derivative claims without surprise or prejudice (Brief on the Merits (Christopher F. Bertucci, et al), PDF p. 28; Petition for Review (Christopher F. Bertucci, et al), PDF p. 19).

**Respondent and Cross-Petitioner (Watkins):** Bertucci waived any challenge to the derivative claims by failing to provide authority, argument, and facts specific to each entity, and the claims are redundant of his individual claims, so any error was harmless (Brief on the Merits (Eugene L. Watkins, Jr), PDF p. 14; Opinion, PDF p. 11).

**Fiduciary duty, limitations, and evidence.**

**Cross-Petitioner (Watkins):** He owed no fiduciary duty to Bertucci individually, and limitations bars the claims because Bertucci, as sole investor and an officer, director, or owner with access to the records, knew, or should have known of any diversion (Brief on the Merits (Eugene L. Watkins, Jr), PDF p. 19; Petition for Review #2 (Eugene L. Watkins, Jr), PDF p. 17; Opinion, PDF pp. 12, 20-21).

**Respondent on cross-petition (Bertucci):** The discovery rule and fraudulent concealment toll limitations, the court of appeals correctly held that fact issues preclude summary judgment on limitations, and Watkins failed to present competent corroboration of his testimony under the Dead Man's Rule (Response to Petition (Christopher F. Bertucci, et al), PDF p. 5; Brief on the Merits (Christopher F. Bertucci, et al), PDF p. 10).

## Stated Reasons the Court Should Take the Case
Bertucci argued that the court of appeals elevated form over substance in finding briefing waiver and that the unverified auditor's report should not have been treated as conclusive (Petition for Review (Christopher F. Bertucci, et al), PDF pp. 9, 19). Watkins argued that the court of appeals ignored *Berry v. Berry*, under which a person owed a fiduciary duty is not absolved of the obligation to use reasonable diligence to discover an injury (Petition for Review #2 (Eugene L. Watkins, Jr), PDF p. 17).

## Oral Argument

- **Individual claim.** Asked what an individual fiduciary-duty claim adds, Bertucci's counsel said they are not entitled to one if a derivative claim can give the companies relief, apart from the auditor's testimony. (Oral Argument, 0:13:11)
- **Same claims.** Asked whether the individual claims matter if the derivative claims proceed, Watkins's counsel agreed with the dissent below that they are the same claims seeking the same remedies. (Oral Argument, 0:32:13)
- **Derivative claims briefed.** Asked whether the rest goes away if the derivative claims were not waived, Bertucci's counsel said it may, since the opening brief addressed fiduciary duty, damages, and limitations. (Oral Argument, 0:01:00)
- **Render or remand.** Asked what else the Court must address if the derivative claims were preserved, Bertucci's counsel said the Court might render judgment on the overlapping claims rather than remand. (Oral Argument, 0:05:04)
- **Auditor's report.** Asked whether to address the auditor's report itself, Bertucci's counsel said the Court could on this record, because the report is unverified and the belated verification established nothing. (Oral Argument, 0:16:29; 0:19:09)
- **Distinct funds.** Asked whether misappropriating funds owed to Anthony could be a separate claim, Watkins's counsel said yes, if the funds and damages are distinct from the companies'. (Oral Argument, 0:33:50)

## Practice Area Tags
business-organizations, fiduciary-duty, civil-procedure

## Procedural Posture/Vehicle
Petitions for review from the Third Court of Appeals after summary judgment in a probate court; argued October 1, 2024, and decided March 14, 2025 (Opinion, PDF pp. 1, 5-6, 29).

## Amicus Involvement
None. The docket shows no amicus filings.

## Holding
Bertucci did not waive his appeal of the derivative claims by inadequate briefing, so the court of appeals must address them; the court of appeals erred in holding fact issues precluded summary judgment on Bertucci's individual fiduciary-duty claim, which fails because he did not assert or establish such a duty in the trial court and conceded it was irrelevant given his derivative claims; fact issues preclude summary judgment on limitations; and the court of appeals correctly resolved the auditor's report and the Dead Man's Rule (Opinion, PDF pp. 2, 6-28).

## Court's Reasoning
**Briefing waiver.** Bertucci's notice of appeal and docketing statement named the entities, and the court of appeals styled the appeal accordingly, so he perfected an appeal on the derivative claims (Opinion, PDF pp. 6-7). His brief argued that he had standing to assert derivative claims, that Watkins owed fiduciary duties to the entities because of his roles in them, and that Watkins breached them over six pages, citing the entities' governing documents, so he did not waive the issue (Opinion, PDF pp. 8-9). Courts should hesitate to resolve cases on procedural defects, Watkins claimed no surprise and addressed the derivative claims himself, and omitting the entities' names from the cover page and the Identity of Parties section was at most a minor, technical defect that Bertucci should have been allowed to correct; the Court remanded for the court of appeals to consider those arguments and noted that it may require additional briefing (Opinion, PDF pp. 9-12).

**Individual fiduciary duty.** General partners owe each other duties of loyalty and care, but limited partners generally do not, and although some courts hold a limited partner who takes on a control role may assume such duties, the Court did not decide that question (Opinion, PDF pp. 13, 17). The court of appeals erred because Bertucci did not explain in the trial court how Watkins's positions created a duty to him individually, argued in response to the summary-judgment motions that he need not prove a direct duty because he sued derivatively, and first argued control in his reply brief on appeal, and a court of appeals cannot reverse on grounds not presented to the trial court (Opinion, PDF pp. 14-17). Even if preserved, the argument fails, because handing over funds creates neither an agency nor a fiduciary relationship, Watkins's role as manager of the funds was assigned to him as a limited partner, and describing himself as a "managing" partner to third parties did not assume that legal role (Opinion, PDF pp. 17-19). Bertucci also conceded that the individual and derivative claims seek the same remedy for the same conduct, so dismissing the individual claim causes him no harm (Opinion, PDF pp. 19-20 & n.17).

**Limitations.** A person owed a fiduciary duty is not altogether absolved of the duty of reasonable diligence, but evidence that Watkins had agreed to manage the entities and handle the accounting, alone had signature authority over the account, assured Bertucci he was taking only agreed amounts, used invested funds for himself, and refused to provide financial information, and made inconsistent statements about what he took, creates a fact issue on when Bertucci should have discovered the alleged misappropriation (Opinion, PDF pp. 20-22).

**Evidentiary issues.** The court of appeals did not abuse its discretion in declining to address the court-appointed auditor's report, which the auditor conceded contained errors and which the probate court treated as conclusive; the Court was inclined to agree that the unverified, erroneous report is neither conclusive nor admissible under Rule 172, but Watkins conceded Bertucci can challenge the report on remand (Opinion, PDF pp. 22-25). The Dead Man's Rule bars Watkins's testimony that Bertucci approved the expenditures because it was not corroborated: Bertucci's inaction over thirteen years is equally consistent with not knowing of the expenditures, and Bertucci did not "call" Watkins to testify about the statements by citing documents that contain them (Opinion, PDF pp. 25-28).

## Disposition
The Court affirmed in part and reversed in part the court of appeals' judgment, reinstated the probate court's summary judgment on the breach-of-fiduciary-duty claims Bertucci asserted individually, and remanded to the court of appeals to address his arguments on the derivative claims (Opinion, PDF p. 28).

## Vote Breakdown
Justice Boyd delivered the opinion of the Court (Opinion, PDF p. 1).


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Source: The SCOTX Report, https://scotxreport.com/cases/23-0329. AI-generated summary of the Court's opinion, orders and the parties' briefs, with pin cites to the page of each document; verify against the Court's own documents at search.txcourts.gov.